Embracer Group acquires DECA Games

13 August 2020

2

DECA – a mobile/FTP asset care and LiveOps expert

Note: Financials based on unaudited preliminary management accounts and estimates prepared in local GAAP. DECA capitalizes no operating or development costs. Consideration and earnout shares represent newly issued

EMBRAC B shares at 2020-08-12 trading close price and with lock-up. 1) Embracer acquires 100 percent of DECA for c. €25m in equity (c.1.9m EMBRAC B shares) including assumed net debt of c. €3.0m, corresponding to an

upfront multiple of c.4x expected operational EBIT in CY20. 2) The maximum earnout is equivalent to c.4.5m EMBRAC B shares. Earn-out shares subject to claw-back rights.

THE

DEALTHE

FUTURE

CREATES EMBRACER’S 6TH

OPERATIVE GROUP

PURCHASE PRICE

c.€25m in equity for 100% of DECA1)

EV/Op. EBIT CY20: c.4x

PLATFORM FOR GROWTH

reinvest cash flows and add funding to

accelerate inorganic growth within

mobile / FTP games

SYNERGIES

access to capital and deal flow

IP catalog

knowledge sharing

experienced developers

LONG TERM ALIGNMENT:

7+ YEARS

up to c.€60m in earnout shares if DECA

achieves profitable growth over

the coming 7 years creating a

substantially larger business2)

Ken Go (CEO) becomes a large

shareholder in Embracer as DECA

reaches its financial targets

MOBILE ASSET CARE

‘DECA acquires profitable FTP IPs

and applies LiveOps expertise

to amplify the game’

highly profitable, cash generative and

scalable model applicable on all

FTP games

2 SITESBERLIN &

BULGARIA

> 35%Op. EBIT (%) FY20/21

> € 20m

REV. FY20/21

100+FTEs

THE

BUSINESS

► Headquartered in Berlin, Germany

► Globally sourced, scalable and distributed team of 100+ FTEs

► Focused on M&A and revitalization of game IP & assets

► Live operations and mobile free-to-play expertise

► >1.5 million DAU across portfolio

► Strong pipeline of new acquisition opportunities across all

platforms and genres

Live operations and Free-to-Play experts

KENNETH GOFOUNDER & CEO

+13 years in F2P Live Operations

General Manager at Kabam prior to DECA

Exec Producer of Kingdoms of Camelot

3

LEADERSHIP

STEPHEN LEEHEAD OF BUS. DEV.

9+ years in Gaming

Head of Publishing at 6waves prior to

DECA

CHRIS O’KELLYHEAD of STRATEGIC

PARTNERSHIPS

12+ years in F2P Live Operations

GM of Huuuge Games prior to DECA

DAN RACANELLITECHNICAL DIRECTOR

10+ years in Gaming

Principal Engineer at WB Games prior to

DECA

14COUNTRIES

100+FTEs

8 IPsIN PORTFOLIO

2016 2017 20202018 2019

4

History of DECA Games

Inception25

FTEs

50

FTEs

65+

FTEs

100+

FTEs

July 2019

Owned IP1)

Note: Flags represent country of development 1) Acquisition of development and publishing rights.

October 2018

Owned IP1

ANNO

2014

January 2020

Owned IP1

ANNO

2011

June 2020

Owned IP1

ANNO

2017

January 2017

Licensed IP

ANNO

2012

July 2017

Owned IP1)

June 2016

Licensed IP

ANNO

2010

Forged

strategic

partnership

with FortePC free-to-play

Mobile free-to-play

TITLE TO BE

ANNOUNCED

CQ3 2020

Owned IP

5

DECA’s operational model

Acquisition strategy LiveOps / Development Value creation

Improve retention &

monetization

Prolong game lifetime

Decrease operating

cost

Technology agnostic

team

Deep engagement with

Community

Promising IP & assets

at attractive multiples

Profitable and cash

generative gamesIncrease active user

base

Strong loyal

communitiesLive events and in-

Game promotions

Content creation and

feature developmentLongevity of game

• Active Game

community doubled

in size

• Engagement higher

than ever

• New content,

game

reblancing and

cosmetics

releases

• Bug Fixing

• Grew users and

revenue in its 8th

year of operation

without paid

marketing

• Harnessed the

power of

community

• Social media

to reactivate

lapsed players

6

• Took over LiveOps

in 2016 (Anno:

2010)

• Had been operated

by small team with

minimal support

REVITALIZATION VIA COMMUNITY ENGAGEMENT AND CONTENT DEVELOPMENT

Notes: […]

DIRECTLY AFTER DECA TAKEOVER AND CONTINUING IMPROVEMENT

7

ENGAGING IN GAME EVENTS AND GROWTH IN 9TH YEAR OF OPERATIONS

Note 1): Dragonvale was acquired in the February of 2020 from Hasbro

Takeover

• Optimization of in game

events and content

release frequency

• Additional new users

through cross promotion

and reactivation

campaigns

• Released in 2011

• 45m+ lifetime players

• Acquired game after

studio was shutting

down

• Re-engaged

community via social

media and chat

• Strategic partnerships

to include new

gaming technologies

• Grew activity,

users and acivity

in its 9th year of

operation without

paid marketing

0

10

20

30

40

50

60

-

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

2019 2020

MAU Sessions/User/Mo

Note: 1) Embracer and EY estimate. 2) $1-10m Net contribution before acquisition related amortization. 3) SensorTower (2020) representing

44’000 F2P games had been released between Jan-Sept 2019

Considerable market for profitable FTP games that lack operational attention

8

FREE-TO-PLAY MARKET 2019

ADDRESSABLE MARKET TODAY

$87bn

600k+games

c.90%F2P

c.60k2

F2P games released

per year

$14bn

16%

TOP 10

GAMES

F2P GAMES

GENERATING

$1-10m/year1

$40-60bn1

c.50-70%

(USDbn)

GOING

FORWARD

Strictly private and confidential

Extending ‘asset care’ to the mobile / FTP segment

9

DECA is a key pillar

in building a growing,

profitable and cash

generative mobile

and FTP business

within Embracer

Mobile and FTP is

highly complementary

to Embracer’s existing,

fast growing business

within premium

PC/console games

development and

publishing

Ambition to build a

diversified portfolio of

established mobile

IPs, while exploiting

current IPs on mobile

platforms and

experiment with

FTP mechanics

Strictly private and confidential

Embracer Group is the parent company of businesses developing and publishing PC and console games for the global games market. The group has an extensive catalog of over 170 owned franchises, such as Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdom Come: Deliverance, TimeSplitters, Satisfactory, Wreckfest, Destroy All Humans!, World War Z and SnowRunner, amongst many others.

With its head office in Karlstad, Sweden, Embracer Group has a global presence through its five operative groups: THQ Nordic, Koch Media/Deep Silver, Coffee Stain, Amplifier Game Invest and Saber Interactive. The group has 33 internal game development studios engaging more than 4,000 employees and contracted employers in more than 40 countries.